Unfair Claims Practices by Insurers

Under California Code of Regulations, title 10, secs. 2695, et seq., California has outlined regulations that insurers must follow in order to protect those that are paying to be insured. These are a portion of the rules of the road for insurance companies when handling an insurance claim. Unfortunately, it’s a common issue for an insurance carrier to abuse their power and be involved in unfair claims practices like delaying a payment or refusing to explain the basis for a claim denial. Any insured policyholders who have filed a claim need to make sure their insurer is following these rules below:

Sec. 2695.4 – requires an insurer provide the policyholder with all benefits and coverages they are entitled.

Sec. 2695.7(b) – requires an insurer provide in writing the factual and legal bases for any denial, whether the denial is in whole or in part. A blanket statement that a claim is denied is not enough, and a policyholder should always request a more definitive response. If a policyholder submits to insurance a quote for repairs that must be made, under 2695.9(d), the insurer is required to review those quotes and provide this explanation for the denial of any portion of that quote. A decision to accept or deny coverage must be given within 40 days. If 40 days is not enough time to make a determination, then insurance must notify the policyholder. Under sec. 2695.7(c), updates are required every 30 days. 

Sec. 2695.9(b) – an insurer cannot require a policyholder use a certain vendor to make repairs as the result of a loss. Any insurer can only recommend a vendor in writing, must provide the names of three vendors, and must disclose that the policyholder is not required to use those vendors.

Sec. 2695.9(d) – an insurer must review an estimate provided by the policyholder and must reasonably adjust that estimate.

Although these are just some of the rules that insurers must follow, there are also many other protections for policyholders. However, it is ultimately up to the insurance carrier to be ethical with your contract and settle claims fairly and timely.

This is Eric Townsend with the F & F Attorneys and I hope you found this article beneficial. Should you find yourself in a situation where you believe your insurer is abusing your contract, please feel free to give me a call and we can review your insurance policy. A property insurance lawyer can protect you from unfair claims practices and help you with any claims settlement. Contact us today!